Friday, March 20, 2009

Toronto-Dominion Bank isn't only expanding its retail-banking and discount-brokerage operations in the U.S. The Canadian bank is also setting its sight on bolstering its wealth-management footprint there.

TD Wealth Management is planning to open a standalone private-client services unit in New York and Philadelphia early next year to expand its operations for serving affluent clients in the U.S, said Bill Hatanaka, head of TD Wealth Management.

The move underscores the bank's plan to capitalize on cross-selling investment products to TD's growing number of retail-banking customers, following TD's acquisition Commerce Bancorp Inc. last year and of Banknorth before that.

"We are working now to establish our wealth-management strategy with our U.S. personal and commercial bank," Hatanaka said. "We think we'll resonate well with our retail partners in the U.S...we can take the retail-bank-branch continuum and move it to the basic investing continuum."

TD has about 150 financial advisers in the U.S. who are spread across its retail bank branches, or in standalone trust offices, or trust and investment offices throughout the eastern U.S.

Out of TD Wealth Management's C$170 billion in assets under management as of end of January, the U.S. accounts for just C$8 billion, or roughly 4% of the retail brokerage unit's total AUM pie.

"We're in a very early stage of setting up wealth-management capability in the U.S.," Hatanaka said. "The mandate is not to grow the number of financial advisers in the U.S. this year, but to make sure that we set up our initial infrastructure for the U.S. model."

TD's strategy to link wealth management with retail-banking operations isn't a foreign concept to the Canadian bank. The firm's wealth management's lifeblood has long been tied to its retail-banking operations in Canada, where bankers and advisers have historically been housed under one roof to facilitate cross referral of business. "Every time a retail branch is being built, quite often we put a financial planner in there," Hatanaka said.

In Canada, TD has 650 financial planners who serve mass affluent customers (those with around less than C$500,000 in assets to invest). The wealth-management arm also has 700 investment advisers who cater to affluent and so-called high-net-worth customers (around C$500,000 to C$10 million in assets to invest), and 350 investment counselors or portfolio managers, and other employees who work in its private-client-services unit that caters to ultra-high-net-worth clients (around C$10 million and up in assets).

Average production per investment adviser in TD Wealth management stands at C$700,000, and assets under administration per investment adviser average about C$75 million. Assets under management stood at C$170 billion, and total assets under administration stood at C$163 billion as of end of January at TD Wealth Management.

While TD has found success in capturing clients who are mostly in the process of accumulating wealth, the next focus will be targeting retirees who are leaning towards wealth preservation and transition in Canada and in the U.S. "The preservation and transition zone will be even more important as we go forward in the future," Hatanaka said. "A lot of our resources are being applied in those areas."

In Canada, TD has private-client-services offices that offer trust and estate services, and other type of products and services that are geared more towards wealth preservation and transfer.

TD has also started to create standalone offices for some senior financial planners from the retail bank branches, depending on their years of service, book size and number of clients. "This makes way in the retail branch for a financial planner with a developing book who can better take advantage of the referral system," Hatanaka said.

In terms of recruiting, TD plans to hire 80 net new advisers in Canada, 40 of whom will be investment advisers catering to the affluent and high-net-worth market, while the rest will be financial planners and rookies. In the U.S., TD plans to add 20 advisers for its private-client-services group this year. TD has 15,000 global high-net-worth clients, but wouldn't disclose the total number of clients.

"We have fewer investment advisers," Hatanaka said. "But we're the fastest-growing investment-advisory business in Canada over the last four years."